• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar

Sarah Jarvis Team at One South Realty

at One South Realty

  • Search MLS
  • Stats
  • Deals!
  • About Us
    • The Team
    • Testimonial
    • 5 Things I Tell My Clients
  • Calling Policy
  • The Blog
  • Show Search
Hide Search

Condos

The Lofts and Flats of Richmond, Virginia

July 9, 2019 By Rick Jarvis

A lot of what we talk about on this blog is the condition of the market –– especially localized market conditions –– and how they are trending. We also spend a lot of time talking about pricing and valuation methods.

The high-end Decatur property is located in Manchester.

But today, we are going to take a break from the math and talk about a more fun topic –– the lofts and flats of Richmond VA.

(photo credits to Kent Eanes, Trevor Frost, Dennis Papa, and Bryan Chavez)

We All Love Lofts

I think that deep down, a little part of each of us wants to own a loft. Whether it is a small flat in an old industrial section of town or a fully renovated uber-loft with the perfect blend of new and old, lofts are just cool.

Think about it –– how many times have we seen a hip loft or groovy flat serve as a centerpiece for a movie or favorite TV show?

Often.

I mean, how can you forget the iconic scene in Big with Tom Hanks and Elizabeth Perkins bouncing on a trampoline in the young Hanks’ NY loft?

Or do you remember the scene in Wall Street where Daryl Hannah’s character (Darian Taylor) turns Charlie Sheen’s (Bud Fox’s) penthouse into a post-modern art museum (complete with the Talking Heads playing in the background)?

Or even Demi Moore and Patrick Swayze making pottery in their recently purchased dream loft in Soho in Ghost? (sorry, but that video was a bit too risque to show in this blog …)

Lofts are Cool

Admit it, each time we see a perfectly decorated loft, we think, ‘Wouldn’t it be cool if we …’

The answer is, ’Yes, it would be cool.’

The Mule Barn is located in an alley and is one of the Fan District’s only loft properties. And yes, the name reflects its history…

And the good news is that we can help you.

Where are Richmond’s Lofts?

The lofts in Richmond are primarily set in two Richmond neighborhoods –– Manchester and Jackson Ward. Yes, Church Hill, Shockoe, and Scotts Addition have a few options (and even a few can be found in the Fan District), but most of the spaces that can be called ‘lofts’ are located in the formerly industrial districts of Richmond.

Cary Mews
The Cary Mews was a newly constructed series of historic and newly constructed flats on West Cary Street.

The good news is that there is also a wide range of styles, sizes, and price options in our market. Unlike New York or San Franciso, where the lofts tend to be large and frightfully expensive, there are numerous options for smaller and more affordable lofts if your budget isn’t unlimited.

Here are some of our favorite spaces in Richmond.

The Decatur | Manchester

Have you ever heard of The Decatur?

The open design of the Connell-Brickner loft in the Decatur means skyline views from almost all of the main living area.

The Decatur is a niche 4 unit property in industrial Manchester abutting the Plant Zero/ArtWorks property between Hull and Decatur along 3rd Street.

Developed in the early 2000s, the Decatur is 3 residential spaces –– all designed in a different fashion –– and one commercial space.

The Decatur loft is currently for sale and can be found here

What makes The Decatur unique is that each owner bought their space in raw and then finished it according to their own wishes, and with some extremely high-end finishes (think ‘build to suit‘ loft!) Unit C, the Rodriguez-Chapman loft recently sold and Unit B, the Brickner-Connell loft (with private elevator) is currently on the market.

The views from the Decatur’s roof deck are some of the best in Richmond.

And yes, the roof deck must be seen to be believed, with some of the most expansive views in all of Richmond.

The Emrick Flats | Jackson Ward

In the early-mid 2000s, just as the development momentum of Downtown was heating up, a small group of developers decided that the concrete and glass former car dealership that they had just bought would make a really cool condo building.

And thus was born the unapologetically industrial and super-groovy Emrick Flats.

Emrick 32
Unit 32’s unique triangular shape means 3 sides of glass.

As condos go, Emrick occupied a very specific and edge place in the Richmond market. Emrick wasn’t for everyone –– it either spoke to you or it didn’t –– and you knew it immediately. It made the condos quite easy to sell, honestly, as you could tell within a few minutes how a buyer felt (I was lucky enough to represent the sales in the building.)

I always loved how the developer made the elevator an essential element of the property.

The beauty of truly industrial space is that almost any non-traditional aesthetic works. Minimalist works. So does contemporary. So does modern. So does eclectic. The ways each owner took what the condo offered and made it their own was really fun to see.

Emrick’s shape was driven by the irregular intersection of Broad Street, Adams Street, and Brook Road.

Emrick’s unit size tends to be a bit smaller (and so does the pricing) with the exception of a few of the top floor spaces. A few owners either combined multiple units or have multi-level spaces with private decks.

Availability will vary within the building so you have to keep an eye on the market to make sure you don’t let the perfect flat slip by. 

The Scudder Loft | Shockoe

When Steven Spielberg came to Richmond to film Lincoln, he needed something worthy of, well, Steven Spielberg.

The view from the north balcony is of Downtown.

Unit 1501 at the Vistas met the standard and served as his home for nearly a year as he filmed the epic bio throughout Richmond and Petersburg.

This what you see when you stand in the kitchen…

The Scudder residence at the Vistas differs from most of the loft spaces in Richmond in that it is located in a more polished part of town and within a newly constructed tower, as opposed to within an older building in one of Richmond’s revitalized industrial districts.

Despite the fact that the Vistas building was new at the time, the renovation was special.

Local architect, Dave Johannas’ team handled the re-design, as well as many of the selections, and helped execute the owner’s vision. For anyone who has had the opportunity to spend any time in the condo, it is spectacular, and (at least in my opinion) the views are the best in Richmond

Gotham | Downtown

In 2000, no one from Richmond was thinking about Downtown living.

The native Richmonder viewed Downtown as a place to work, and maybe eat (or drink) and then leave –– until Gotham.

The non-local developers of Gotham (Chicago and New York) purchased one of the ‘iron fronts’ at 12th and Main Streets and created 8 contemporary flats in a former office building that (I believe) was formerly owned by a printing company.

Of the 8 spaces, the two penthouses that front on Main are the most special.

(For a complete listing of condo projects and availability, check out our Ultimate Guide to the Richmond Condo Market).

The private elevator entrances, the multi-level living, the contemporary aesthetic, the first of Richmond’s roof decks, even the name ‘Gotham’ –– all of these features were effectively unseen before and when combined into purchasable spaces, changed Richmond’s view of itself.

Gotham deserves a lot of credit for showing Richmond that Downtown was, in fact, a really great place to live.

Other Lofts

The lofts (and projects) we listed above are a sample of what is available to the loft enthusiast, but there are others. 

Old Manchester Lofts
The Old Manchester Lofts did a great job with incorporating the interior features of the century-old warehouse into the common areas.

Properties such as the Old Manchester Lofts (Manchester), The Mule Barn (the Fan District), the warehouse side of The Reserve (Tobacco Row) and the Cedar Works building at Rockett’s Landing help satisfy the loft need in Richmond with smaller space options.

The Papa loft in Shockoe Slip.
The Papa loft in Shockoe Slip.

Other one-off renovations, such as the spectacular flat that local developers Tom and Angel Papa created in Shockoe Slip, or several other combined units at the Vistas, Riverside, and Rocketts Landing serve the need for larger spaces and come to market occasionally.

At the end of the day, Richmond’s loft market is a healthy one with more depth than many realize. And when combined with a diverse supply of new infill townhouses in many of the same neighborhoods, the Richmond housing market has never healthier.

Back on the Market

February 1, 2019 By Rick Jarvis

Agent: Congratulations! You are under contract!

Client: Great! So we are done, right?

Agent: Not exactly. Anywhere from 10% to as high as 20% of contracts fall apart for one reason or another.

Client: Wait, what?!? There is as much as a 20% chance that the contract I have on (or for) my house will fall apart?!? How can I make any plans going forward with that much uncertainty?!?

Agent: Let’s talk about why.

The Back on Market Statistic in MLS

First, let’s talk about where we get the data.

The Multiple Listing Service tracks a lot of statistics –– one of which is called ‘BACK ON MARKET’ (or BOM).

BOM measures the number of homes whose status changes from ‘PENDING’ (meaning under contract) back to ‘ACTIVE’ (meaning ‘available for sale.’)

This is the home screen of MLS that shows agents a quick update of the day’s (or week’s) activities.

Computing the Failure Rate

A random sample of a week in middle January yielded the following results:

  • 569 homes went PENDING
  • 65 came BACK ON MARKET
  • 65/569 = 11.4% contract failure rate

(A quick note –– a week later, the number of ’Back On Market’ properties, jumped to nearly 14% with 40 of 295 coming back to Active status from Pending –– so this metric will change week to week.)

Released and Temporarily Withdrawn

Now if you note the screenshot, you will see where RELEASED and TEMP(orarily) WITHDRAWN are also highlighted:

  • RELEASED –– meaning that the listing agent and owner have agreed to part ways.
  • TEMP WITHDRAWN –– meaning probably what you think, the home has been removed from the market for an unspecified period of time per the seller’s request. 

Both of these status changes (66 Released + 38 Temp Withdrawn = 104) often come on the heels of a failed contract –– and thus the count of the Back on Market is most likely higher. 

Between 10% and 20%

So, yes, somewhere between 10% and 20% is the correct number.

This number will vary based on what time of year you examine, what price point you are in, and what geography you study and of course, what percentage of the Released and Temp Withdrawn homes you assume were the result of a failed contract.

Why Don’t Homes Close?

A 10% fallout rate is a big number. A 20% fallout rate is even bigger.

A contract, you don’t have.

When you are making irrevocable (and expensive) commitments that depend on a successful settlement, 80% certainty doesn’t feel great, does it?

It shouldn’t.

Let’s discuss the reasons.

The Primary Reasons

Homes don’t go to settlement for any variety of reasons –– but they generally fall into one of the following categories:

  • Lender incompetence
  • Appraisal less than the sales price
  • Inspection issue
  • Agent incompetence
  • Cold feet

Let’s discuss each.

Lender Incompetence

I cannot stress this enough –– work with a lender with the following characteristics:

Pick 2 …
  • They are local (not Quicken, USAA, or some other internet lender)
  • They are tied to a bank (meaning they have ‘shelf loans’ or other specialty products)
  • They do a lot of business with the agent (you will be on the top of the pile and receive favorable treatment when positive underwriting interpretations are required)
  • They have a full range of products (many lenders only have a limited product menu and will try to place you in the wrong product because they don’t have the correct option)
  • They have a ‘Lock and Drop’ feature (meaning that if rates drop during the lock period, you receive the lower rate)
  • They are not your Credit Union (contrary to common belief, CU’s do NOT give better rates and their representatives are typically not licensed)

Furthermore, when it comes to niche purchases (condos, rehabs, multi-family) or complex underwriting (divorce, business owner, commission income) using a mortgage company with specialists in the specific loan type is critical. 

Alas, few borrowers (or agents) know how to find those who specialize in the specific niche required.

The Dreaded Internet Lender

To the Sellers –– if you are a seller and you receive a contract from a purchaser who plans to use an internet/non-local lender, accept the contract at your own risk and do not be surprised when, at the 11th hour, you get the dreaded ‘we have a problem’ message. 

Quicken Loans Arena, anyone?

To the Buyers –– if you are a buyer and in a multi-offer scenario, using Quicken (or USAA) is an almost near guarantee that you will not be the winning bid. Why? Because listing agents know how difficult and unreliable internet lenders are.

Internet lenders can be decent for refinancing (mostly because a missed closing date isn’t overly penal,) but for purchasing a home, they just carry too much risk.

Cheaper Isn’t Better, It Isn’t Anything

50% off!

A rate that is ½ point lower that closes late (or not at all), is not a better rate –– it is actually more expensive!

Late closings trigger penalties, loss of deposits, and a handful of other emergency decisions (hotel stays, storage units) that eat up any savings that the rate promised. 

The bottom line is that the local lender puts their reputation and well-being on the line every time they issue a pre-qualification letter. If their organization can’t perform as promised, they don’t just lose the current deal, they lose the rest of them. 

An Appraisal Issue

When prices are accelerating rapidly (especially in the spring), comparable sales lag where the market is.

Looking at past sales is like driving while looking out of your rearview mirror.

In other words, when you are trying to establish the fair market value of a home in March of 2020 –– and the sales comps are from the fall of 2019 –– you will not find the sales from yesterday you need to justify the price today.

But unfortunately, that is how the appraised value is determined –– via PAST sales.

We like to say that using comparable PAST sales to establish value TODAY is like driving while looking out of the rearview mirror –– it tells you where you were, but not where you are going.

When you, as a seller, have accepted a contract on a home where there were multiple bids, odds are, the sales price has been pushed above the value at which the home will appraise. When a loan is subject to appraisal (as many loans are), an appraisal below the sales price places the loan in jeopardy.

Appraisal Math

Applying some numbers –– if the purchaser is putting 10% down on a $300,000 sales price and the appraisal comes in at $290,000, the seller is responsible to make up the difference –– in other words, they have to find an additional $10,000 in down payment. 

If the purchaser has no excess cash (or is unwilling to access it), then the seller is forced to either:

  • lower the price to the appraised amount
  • accept the loan denial and put their home back on the market

The bottom line is, as a seller, you have to look at the type of financing the purchaser is using –– and specifically how the appraisal contingency is worded –– to properly judge how susceptible you are to the appraisal causing the contract to not move forward. 

A good agent knows how to assess the risk.

Inspection Issues

Inspections are the bane of almost every agent’s existence. 

Essentially, you have buyers who feel like they overpaid (and feel entitled to a perfect home,) sellers who see every issue as cosmetic, and inspectors who feel it necessary to point out every flaw, including that the doorbell is not at the correct height (not kidding.)

On the other end of the inspection report are agents who know very little about construction and contractors who both disagree with the inspector’s assessments and cost estimates, and are trying to generate even more business for themselves by spooking the clients –– all trying to decide if a $100 piece of siding is rotten or just soft. 

It is maddening.

Call it pride, call it short-sightedness, or simply stupidity, but way too often we see $500 worth of inspection items torpedo $300,000+ sales

($500 / $300,000 = .0016, in case you wanted to see how inconsequential that amount actually is.)

No Home is Perfect

At the end of the day, as a buyer, be prepared to take the home with a few issues –– especially given the market conditions. Are we saying that a cracked foundation, a failing 50 year old roof, and radon readings in the 100’s are not issues? Of course not. But when minor carpentry issues, a few questionable double taps on your main circuit panel, and wobbly toilet are found, it is ok. Don’t freak out.

And a final note for sellers –– I have yet to see a house that comes back on the market get a better offer. Digging in to save yourself $1,000 only to cause your buyer to flee is a poor strategy. You are almost always better off to work with the offer in hand, even if it means swallowing your pride and working out a deal that feels one-sided. 

Agent Incompetence

My first broker was fond of saying that, as an agent, when you have a willing buyer and a willing seller, get out of the way. 

It is one of the truest statements he ever uttered. 

Far too often, in an effort to either feed an ego or justify the commission, agents will engage in activities that complicate or sabotage the transaction. Speaking too much, introducing doubt, blaming the other side, making mountains out of molehills –– all of these actions put unnecessary pressure on a transaction when there needn’t be.

The net result is it exhausts everyone’s emotional energy to such a point that the sides oftentimes become unable to work through an issue that normally would not derail the transaction.

It happens far more than it should.

Cold Feet

And yes, every once in a while, a simple case of cold feet (i.e. –– Buyer’s Remorse) is the culprit. 

Typically, buyer’s remorse occurs when a) the deal is too one-sided, or b) the purchaser didn’t fully do their homework before finding themselves under contract to purchase a home. 

Agents and Uncertainty

As an agent, it is absolutely your responsibility to make sure the buyer understands their decision:

  • Educated and confident buyers make decisions that stick
  • Buyers who never developed a true understanding of market conditions tend to walk away

Agents –– if you want your deals to stay together, empower and involve your clients.

Summary

So yes, not all deals go to settlement.

Statistically speaking, somewhere between 10% and 20% will fall apart for one reason or another. And thus, some percentage of sellers will have to go ‘Back on the Market’ after experiencing the frustration of a contract that did not stick.

So, as a seller, how in the world do you defend against being left at the altar?

Well, that is Part II of the series …

Buy a House, Pay for College

February 4, 2018 By Rick Jarvis

Several years ago, we wrote a blog about buying a small house or condo for your child attending VCU. That article has always been popular and carried significant traffic on the web.

And Now… We Have a VCU Student!

Since the first article is now a bit outdated and we’re currently in the works of purchasing a home for our own child headed to VCU, we think now is the perfect time to take a deeper look at the concept.

First, let’s look at some pricing statistics for the past several years.

YearMedian Sales PriceMedian Price/SF
2015$187,000$147
2016$210,000$159
2017$227,000$179
2018$238,000$182
2019$255,000$191
+/- %+36%+29%

For the area that surrounds VCU’s Monroe Park Campus, you can see that pricing has been rising –– by about 30% over the last 5 years.

That could pay for a lot of college tuition.

Here’s Some Context:

The cost of a VCU dorm in 2020 is $11,506  (up from $7,800 in 2018)

  • Per our rental managers, the average cost of rent is anywhere from $600-700 per bedroom in a standard house.
  • To rent a 1 bedroom studio apartment, the number rises closer to $1,100 to 1,200 per month
  • To rent a 2 bedroom/2 bath apartment, you are likely to pay anywhere from $1,600 to $2,000 per month

The Numbers

So imagine the following scenario –– 

Purchase the home for $350,000 and sell it 4 years later for:

  • $409,000 given only a 4% annual appreciation rate
  • $425,000, given a 5% annual appreciation rate
  • $441,000, given a 6% annual appreciation rate
  • Instead of paying $11,000 in rooming costs to VCU, you received $1,300 in rent per month from two roommates
  • And you paid down your mortgage balance by roughly $20,000 to $40,000 depending on loan type, interest rate, etc.

    (As a small disclaimer: The past does not guarantee what the future will look like and the type of loan you choose and interest rate you receive will impact how quickly you pay down the mortgage balance.)

Loan Possibilities

Though there are some navigable hurdles, you can co-sign for your child and use a Maximum FHA loan that requires a very low down payment. There are also loan programs for non-owner occupied co-borrowers for less than 20% down. And finally, there are investor loans that allow you to purchase without requiring 20% down.

So all that said, you have options and not all of them require substantial amounts of cash.

So depending on what loan type you choose, we can help you find an originator who knows the market for investor and co-borrower loans.

But Aren’t Prices Going to Stop Rising?

Maybe if we solve the inventory problem or everyone decides to leave the city.

To solve the inventory issue, all we have to do is figure out how to build another, say, 3,000 or so houses per year around VCU (which if you aren’t detecting my sarcasm, is near impossible).

So while past performance is no guarantee of future returns, but, of all of the segments that offer value protection, it is housing that surrounds a 30,000 student university –– especially an urban one where the ability to add additional housing is essentially nil.

Furthermore, the fact that VCU’s housing need is largely supplied by the private sector means that the dorm life element of VCU is far less important than it is at other comparable institutions.

To back this statistic up, as we entered into the 2020 market, there was less than 2 months of inventory –– and that is as low as it has ever been.

Summary

So is purchasing for you? Not necessarily, but for many it makes a lot of sense.

The inventory issue is not really solvable and owning property next to perhaps the most important economic engine in the region has proven to be a great hedge against market downturns.

We can help.

One of the Coolest Transactions I’ve Ever Worked On

May 31, 2017 By Rick Jarvis

In late 2016, I got a call from an agent who wanted to show a loft we had for sale in Manchester.

The Decatur Condos, an Architectural Digest level renovation of a century old warehouse, was – and still is – one of my favorite properties I ever represented. I was always happy to show it and tell its amazing story.

The Tour

The Decatur is located off of 3rd Street in Manchester.

The agent and client showed up at the appointed hour and we toured the property. The client was relocating from out of town and wanted an upscale, urban loft. Knowing the property and the Manchester neighborhood as well as I did, I was able to shed a lot of light on both the development trends and the Downtown condo market, especially in the districts where the small supply of upscale lofts existed.

The tour went well and we left with, ‘Ok, cool. Let me know what questions you have.’

I followed up several times with the agent over the course of the next several weeks, all to no avail, and eventually figured that they had found something else.

The Call

About a month later, I got a call from the client who had toured.

The Decatur building is 3 residential and 1 commercial condo — each developed with a totally different aesthetic.

She was impressed by our knowledge of the loft condo market and wanted to engage us as her representative. She was coming back to town soon and wanted us to set up some tours.

We were obviously happy to oblige, but the supply of upscale loft condos is relatively small. Finding the perfect industrial condo loft was going to be a challenge.

And this is where the story gets fun.

Knowing the Market

One of the first projects One South represented in the Downtown revitalization movement was a project called the Emrick Flats. Located near Broad Street in the Jackson Ward neighborhood, Emrick was one the first authentic industrial flats in Richmond. The concrete structure, highlighted by soaring ceiling heights, walls of windows, and private roof decks was located in the heart of Jackson Ward’s revitalized Arts District.

The Emrick Flats is located just off Broad Street on a triangular lot between Brook Road and Marshall Street.

When Emrick was brought to the market in 2007, we were chosen to represent the developer in the sale of the units. As its listing agent, it was my job to sell not just the project’s units, but the lifestyle, neighborhood, and budding potential of Richmond’s Downtown. It remains one of the best and most fulfilling projects I have worked on in my time as an agent.

The Perfect Fit

Knowing the project as well as I did, I also knew which owners might be willing to sell, despite not actually being on the market.

The Emrick Flats personifies industrial living in RVA!

One of the best units in the building was situated in the southern tip and was one of a handful of spaces with rooftop access. Furthermore, the owners had purchased the adjacent unit and combined the spaces in an extremely well done contemporary renovation.

The most important detail? The owners had just had their first child, indicating that they might be willing to make the move.

A call was made.
A price as established.
The client toured.
A contract was written.
A settlement occurred shortly thereafter.

It was perfect.

The Value of the Right Agent

In most cases, the value that is added to a transaction by an agent is less about finding a property and more about navigating the process and knowing what to do when issues arise. The available stock of properties is published on a thousand different real estate websites for the world to see, so clients tend to be as integral to finding the properties they buy as the agents do.

But when the perfect property is not for sale and the agent can make it appear, then their contribution to the process becomes almost priceless.

In this case, a combination of detailed market knowledge, a deep personal network and simply paying attention to our clients’ unique circumstances made all the difference. We were obviously thrilled for everyone that we could put this together.

At the end of the day, the agent you choose matters greatly, regardless of what Zillow and Trulia might have you believe. Despite all of their information, the online search sites simply don’t know what a true professional agent knows.

We were glad to be able to put our inside knowledge to work for our client.

Opportunity in the Condo Market

April 10, 2017 By Rick Jarvis

'If you were in our shoes, what would you do?' is one of my favorite questions...’

It was the latter part of 2011 when we got a call from a couple living in New Hampshire. They had a child who was coming to Richmond to attend VCU and they wanted to purchase a small home or condo (no maintenance is a good thing for a college student).

They were betting that the market was at its bottom (which it probably was) and they were looking for upside.

One of the questions they was asked was, ‘If you were in our shoes, what would you do?’

It is one of my favorite questions.

What Drives the Market?

I have a personal theory that, as an agent, my primary job is to help clients understand the factors that drive the market. Clients who understand why values are what they are make confident and empowered decisions.

Summit Lofts in Scotts Addition
The Summit Lofts in Scotts Addition is now tucked in amongst cafes, several breweries, and new retail spaces. All of the development ceased in the years immediately following the crash and began again in 2013 and 2014.

Clients who understand why values are what they are make confident and empowered decisions.

Larger market conditions — interest rates, employment, taxes — are all largely held constant and are beyond anyone’s control. Market values in the aggregate ebb and flow due to factors well beyond any individual’s ability to impact them. But if you make a good decision about your specific property, when the market rises, the value of your home rises more quickly. Conversely, when the overall market falls, your home’s value does not fall as quickly.

By focusing on hyper-local market conditions like nearby development, incentives, supply, and demand we help our clients acquire properties that are more likely to outperform the market, regardless of the direction it is moving.

All of these factors are easily recognizable to the trained eye. And while they can vary wildly from neighborhood to neighborhood and project to project, the key is understanding how these are likely to impact values moving forward.

Looking for Clues

Maybe it is our experience in project representation and development, but seeing upside in specific condo projects is relatively easy.

Keeping an eye on development, historic designation, the city’s Enterprise Zones, or zoning changes in a specific area is critical in spotting opportunity.

  • RichmondBizSense.com on Scotts Addition
  • Richmond.com on Scotts Addition Zoning Changes
  • Scotts Addition Historic Lines
  • Enterprise Zones — City of Richmond

When you follow the development market, seeing areas poised for price spikes becomes second nature.

Furthermore, condominium values tend to fluctuate more than single family, largely due to the impact of mortgage financing. Mortgage financing is more impactful than any other factor in condo values.

So when you see a) a condo project who recently regained its ‘warrantability’ (which is the industry term meaning ‘available for conventional finance’) or b) a project in a district experiencing intense development, it is a great buying opportunity.

Case Study — The Summit Lofts

Temporary factors had depressed values in the project and, once removed, values were likely to rise more quickly than the market as a whole.

In the mid 2000’s, the partners at Monument Construction, bought a small warehouse and converted it into 14 loft-styled 2 bedroom condos. The units were a good size — roughly 1,300 to 1,400 SF — and were nicely appointed. When they sold initially, most sold in excess of $200,000.

The neighborhood, Scotts Addition, had just been named a ‘historic neighborhood’ by the Department of Historic Resources, meaning that many incentives were now available to developers that made projects far more feasible. The historic designation is the number one accelerant for new development and once an area becomes designated, it is in very short order that a transformation begins.

Then 2008 happened.

Prices fell substantially in the Summit Lofts as several units were foreclosed upon and others became rental properties.

The condo lending rules changed substantially in the years following 2008’s crash. When conventional mortgage financing is no longer available, alternative forms of financing are required that are far less attractive (i.e. — higher rates, shorter terms, higher down payments). This suppresses values.

The Summit Lofts values suffered from both a lack of conventional financing and the loss of development momentum in Scotts Addition — but the fact remained that it was a nice property with good floor plans, nice finishes, and a soon-to-be phenomenal location. In other words, temporary factors had depressed values int he project and, once removed, values were likely to rise more quickly than the market as a whole.

So when our clients were looking for a place for their son, we talked about Summit and why it was a good bet. The development momentum was beginning again and the mortgage financing rules were being relaxed — meaning Summit Lofts now qualified for conventional mortgages.

Our clients made a purchase in April of 2012 and held the property until their child graduated in the summer of 2015.

  • The condo was purchased for $143,000 in April of 2012 and sold for $169,000 in September of 2015. Its value increased by 18.2% (7.8% annually) during the time it was owned by our client. Not too shabby.
  • The condo market overall in Richmond had a median sales price of $175,000 in the second quarter of 2012 and a median sales price of $189,000 in the third quarter of 2015. The market rose 7.6% (3.2% annually) during the same time.

And as you can see, their return on their investment was nearly 250% better than the overall market.

Why? Because they understood why the pricing was lower than it should have been and why it was likely to rise more quickly than the rest of the market.

Summary

We can tell many more stories about how we have helped clients acquire properties with upside as well as helped them avoid properties whose fundamentals are poor and values are likely to stay depressed.

Condos can be tricky animals and you need to understand the additional factors that underpin their market. As city markets tend to shift more rapidly as well, understanding how incentives can help drive values is also critical in making good decisions.

When you can spot fundamental changes in the inputs that drive values (financing, incentives, nearby development), you can find opportunities to out-earn the market.

If you want to do a deep dive on condos, check out our Ultimate Guide to RVA Condos here…

  • Go to page 1
  • Go to page 2
  • Go to page 3
  • Go to page 4
  • Go to Next Page »

Primary Sidebar

804.201.9683


How Do I Schedule a Showing or Find Out More?

I am Kendall C. Kendall, Client Care Coordinator for the team. I am a licensed Realtor and it is my job to answer questions and schedule showings for the properties shown on our sites. Here's our call policy.

kendall@richmondrelocation.net

Working With Buyers

I am Sarah Jarvis, Broker at One South and I work with our buyers. I bring 20+ years of experience to our Buyers Advocacy program and take great pride in helping our clients understand the RVA marketplace.

sarah@richmondrelocation.net

From the Blog

How the New Home Building Industry Actually Works

We have talked at length about building a new home in a series of posts. Things to Keep in Mind How to Negotiate with a Builder How to Value a New Home In this post, we are going to talk about what is really happening when you decide you are going to build a home (or buy a new one) in …

[Read More...] about How the New Home Building Industry Actually Works

More Posts from this Category

  • Facebook
  • Instagram
  • LinkedIn
  • Twitter

The Ultimate Stats Page

Ultimate Stats Page

Latest Tweets

  • It’s wise to follow mortgage rates, but don’t get to caught up nitpicking the rates, because once your locked in th… https://t.co/qLAjQT1QNf March 10, 2023 7:39 pm
  • Are you viewing a housing asset correct? ⁣ #rvahousing #rvarealtor #rvarealtors #rvahousinginsights… https://t.co/gJtuSo6Wkh March 10, 2023 7:35 pm
  • Your miscalculation could cost you. ⁣ #rvahousing #rvarealtor #rvarealtors #rvahousinginsights #onesouthrealtygroup… https://t.co/RqwoqwXaKH March 10, 2023 7:08 pm
  • Don’t lose money in real estate. Work with a trusted agent to build wealth through real estate. ⁣ #rvahousing… https://t.co/IRTHSroHBL March 10, 2023 7:05 pm
  • The market dictates pricing.⁣ ⁣⁣ #rvahousing #rvarealtor #rvarealtors #rvahousinginsights #onesouthrealtygroup… https://t.co/ArRaru8q2j March 6, 2023 8:25 pm

804.201.9683


How Do I Schedule a Showing?

I am Kendall C. Kendall, Client Care Coordinator for the team. I am a licensed Realtor and it is my job to answer questions and schedule showings for the properties shown on our sites. Here's our call policy.
kendall@richmondrelocation.net

804.305.2344


How Do I Determine What I Can Afford?

With over a decade of mortgage industry experience, Southern Trust Mortgage knows what it takes to provide the very best service for each of their clients and truly believes in forming lasting relationships with their customers.
www.southerntrust.com
Southern Trust Logo

Equal Housing

The Sarah Jarvis Team agrees to provide equal professional service without regard to the race, color, religion, sex, handicap, familial status, national origin or sexual orientation of any prospective client, customer, or of the residents of any community. Any request from a home seller, landlord, or buyer to act in a discriminatory manner will not be fulfilled.

IDX Disclaimer

All of the information displayed here is deemed to be gathered from reliable sources but no warranties, either express of implied, are made part of this site. Additionally, the IDX Feed for listing information may contain descriptions of properties not represented by One South Realty, its agents or staff and any violations or misrepresentations are the sole responsibility of the listing brokerage of the subject property in violation.

Our Network of Sites: RichmondVaNewHomes.net, RichmondVaCondos.net, RichmondLuxuryNeighborhoods.com,
RichmondFanRealEstate.net, RichmondVaMLSSearch.net
Housekeeping: Sitemap, Listings Sitemap

 

Members of the Sarah Jarvis team are licensed in the Commonwealth of Virginia.

 

Loading Comments...